Should I buy or rent a home in Pasadena?
As long as I've been selling real estate, this question comes up. Actually, I take it back... it has come up even before I got into the real estate business. You hear it at "get togethers", as you're sitting in the lunch room with your coworkers, talking with your parents, etc. It's about money and having a roof over your head, right?
I thank the good folks at Keeping Current Matters for putting together this great visual which pulled information from an article that appeared in Forbes titled "The Next Mortgage Crisis".
Here's a direct quote from Forbes:
Today, there’s another mortgage crisis in the works—that is, NOT having one—choosing to rent when you can afford to buy...
Powerful, isn't it? Here's what Forbes is saying:
- Investing in a home and building equity is a major source of retirement security now. Especially now... given the soft stock market and low interest rates.
- Americans must change their perspective about home ownership before it's too late.
- A homeowner with a mortgage will still be writing the same mortgage check for $1,500 (as in the illustration above) 15 years from now while prices everywhere increase around them.
- A homeowner will spend $540,000 on their monthly payments over 30 years while a renter will spend $900,000 with the cost of inflation being 3.2% a year.
- Even if the real estate market only appreciates 1% a year. A homeowner of a $300,000 home will still gain $100,000 in equity towards their retirement. A renter would be giving up $400,000 of their retirement assets since they have no equity ($300,000 pay off on the house and $100,000 in equity).
- A homeowner will have a place to live in that has been paid off. The renter needs to continue to find housing and pay rent.
- US government encourages home ownership and subsidizes it by allowing deductions of mortgage interest and property taxes - tax benefits! And should you decide to sell your home will allow you not to pay taxes on the first $250,000 of gains for singles and $500,000 in gains for couples.
Of course, there are still additional expenses even after you pay off your home: real estate property taxes, home owner association fees if you live in a condominium or a townouse, upkeep costs. All have to be taken into consideration. But, consider you should. Run your numbers, talk to a great CPA and consult your local real estate agent.
Is renting a "safer" choice that provides more freedom? YES! But, it might be a very expensive choice in the long run
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Thinking of selling your home? Interested in finding out the current market value of your single family home, condo or investment property? Then call Irina Netchaev at (626) 629-8439 to discuss what is happening in today’s Southern California Real Estate Market.